COTE D’IVOIRE Investment Guide
Foreign Investment Climate
Openness to Foreign Investment
Côte d'Ivoire actively encourages foreign investment. The National
Assembly approved a new Ivoirian Investment Code in the spring of 1995,
containing provisions that modify the Code of June 1985 that is designed to
encourage additional private sector investment in the economy. For all
practical purposes, there are no significant limits on foreign investment - or
difference in the treatment of foreign and national investors - either in terms
of levels of foreign ownership or sector of investment. The former investment
code was aimed at helping small and medium-sized firms; the new code provides
incentives for larger investments as well. Additional incentives are offered to
those who choose to invest outside of Abidjan and other established urban industrial areas.
Beginning in 1995, the Ivoirian Government stepped up its investment promotion
campaign through the establishment of an Investment Promotion Center, or "CEPICI," to use its French acronym.
CEPICI is designed to provide investment information and assistance for
entrepreneurs interested in starting a business or investing in Côte d'Ivoire.
CEPICI operates three basic programs: a "one-stop-shop" for
investors; an outreach program, designed to match opportunities with potential investors;
and a liaison program between the public and private sectors.
Investments from outside the Franc Zone must be approved by the external
finance and credit office of the Ministry of Economy and Finance, but this is
essentially a foreign exchange control/monitoring measure. For limited
partnerships, one or more shareholders must be resident in Côte d'Ivoire.
Though regulations exist to control land speculation by foreigners, foreigners
in fact own significant amounts of land in Côte d'Ivoire.
Currency Conversion and Transfer Policies
Côte d'Ivoire is a member of the CFA Franc Zone, which means that
the French Treasury guarantees the convertibility of the CFA franc. For 1948
until January 1994, the exchange rate was fixed at 50 CFA francs to one French
franc; the rate is now 100 CFA francs to one French franc. Remittances within
the Franc Zone are freely permitted; otherwise, prior permission is required.
For investments coming into the zone from outside prior permission is required
and routinely granted. Once an investment is established and documented,
remittances of dividends or repatriation of capital must also be approved, and
routinely are. The same holds true, in general for requests for other sorts of
routine transactions - imports, license and royalty fees, etc. Occasionally,
delays have arisen as a result of temporary liquidity shortfalls in the banking
system. At the end of 1998, for example, there were delays in foreign exchange
transfers amid rumors of a CFA franc devaluation Jan. 1, 1999 when the French
Franc would be merged into the Euro.
In 1998 the West African Economic and Monetary Union adopted unified foreign
exchange regulations that allow a slightly more liberal foreign exchange
regime. All restrictions on transfers among the eight WAEMU countries have been
eliminated. Foreign Exchange bureaus have been allowed to open. The Government
will be able to delegate to commercial banks its authority to approve routine foreign
exchange transactions. The transfer abroad of the proceeds of liquidation of
foreign direct investments no longer requires prior Government approval.
Expropriation and Compensation
Cote d'Ivoire has a general-purpose public expropriation law, with
built-in compensation provisions.
Dispute Settlement
Enforcement of contract rights can be a time-consuming and expensive process.
Court cases move slowly and some do not appear to be judged on their legal or
contractual merits. This has led to a widely-held view in the business
community that there are corrupt magistrates. The Government is attempting to
improve the judicial system: by having more cases decided by three-judge panels
instead of by a single judge; by computerization and swift publication of
decisions; and by training judges in commercial law. The Government is also
increasing the number of appeals courts to decrease the backlog of cases. A new
arbitration tribunal has been established, under the auspices of the Chamber of
Commerce, where businesses may go to settle their commercial disputes. This is
designed as a reform measure to avoid the inefficient and corruptible court
system.
Subject to the vagaries of the legal enforcement system, property rights do
exist and are respected. Enforcement of real property rights, however, can be
complicated by the clash between the traditional property rights of a village
or ethnic group and the more modern system of long-term leaseholds (freehold
tenure is generally not granted to private individuals or entities). Banks have
experienced difficulties realizing their security interests on real estate
loans.
There is no specific Ivoirian legislation providing for arbitration for
investment disputes, though the use of arbitration provisions was upheld in a
1989 Supreme Court decision. Cote
d'Ivoire is a member of the
international center for the settlement of investment disputes (ICSID).
Performance Requirements and Incentives
There are no general performance requirements applied to investments.
New investments in Côte d'Ivoire may be eligible for customs exemptions, reductions
in duty rates and other tax incentives. The investment incentive scheme is
divided into two zones, Zone A - the region around and including Abidjan, and
Zone B - the rest of the country. The benefits include exemption from income
taxes and licensing fees for five years in Zone A and eight years in Zone B. A
larger investment may be granted exemption from VAT on equipment (including the
first consignment of spare parts) if it is greater than 500 million F/CFA; the
duty rate is reduced to five percent for investments between 500 million and
two billion F/CFA; and complete exemption from duty and VAT on both equipment
and materials is accorded for investments greater than two billion F/CFA.
Properties built for investments greater than two billion F/CFA are exempt from
property tax. The above description is general; for a more precise explanation
of the incentive program, contact CS-Abidjan or CEPICI with specific
information concerning your investment plans.
Private Ownership Rights
Generally speaking, foreign investors have access to all forms of remunerative
activity on terms equal to those granted private Ivorians. Foreign investment
in privatization of parastatal firms is encouraged, though some shares have
been reserved for the parastatal's employees and some have been issued on the Abidjan
stock market.
Protection of Property Rights
The Ivorian Civil Code covers the acquisition and disposition of property
rights, including intellectual property.
Côte d'Ivoire is a party to the Paris Convention, its 1958
revision, and the 1977 Bangui Agreement grouping thirteen Francophone African
countries in the African Intellectual Property Organization (OAPI). In OAPI,
rights registered in one member country are valid in all. Patent validity is
ten years, with two five-year extensions possible. Trademarks are valid for ten
years and are renewable indefinitely. Literary copyrights are protected for
fifty years following the author's death (or posthumous publication). Other
intellectual property rights are valid for five years with various renewal
periods; we are not, however, aware of domestic legislation specifically
covering semiconductor chip layout design.
In February 1999, the member states of OAPI, now expanded to 15 countries,
adopted revisions to the Bangui Accords to bring them into conformity with the
World Trade Organization's agreement on trade-related intellectual property
issues (the TRIPS agreement). Cote
d'Ivoire has approved these revisions
in its Council of Ministers and will submit the Accords to the National
Assembly for ratification by the end of 1999. Cote d'Ivoire has committed in
the WTO to be conformity with the TRIPS agreement by Jan. 1, 2000. Under
TRIPS, Cote d'Ivoire's intellectual property regime will be strengthened.
Though in theory prohibited, counterfeit clothing, textiles, footwear, watches,
computer software and audio and videotapes can be found, particularly among
street vendors.
In January 1999, the Ivoirian Government established a new Office of
Intellectual Property within the Ministry of Small and Medium Enterprises and
Industrial Development. The new office will prepare Cote d'Ivoire
for the entry into force of TRIPS, serve as a liaison with OAPI and work to
sensitize public opinion to intellectual property issues. In order to protect
their trademarks and patents, American firms must take into account the above
regulations and apply to the OAPI.
Transparency of Regulatory System
The Ivoirian Government, working with the IMF and the World Bank, has taken a
number of steps to encourage a more transparent and competitive economic
environment. Among these steps are: the creation of a centralized Office of
Public Bids in the Ministry of Finance in an effort to ensure compliance with
international bidding practices; the use of external financial advisors to work
with the privatization committee on the sale of parastatals; the establishment
of an inspector general's office for the Government; the dissolution of the
non-transparent cocoa and coffee marketing board; and the creation of
regulatory bodies for the increasingly-liberalized telecommunications and
electricity sectors.
Political Violence
There have been incidents of civil disturbances over the past several years,
but they have generally taken place in the context of national elections or of
student demands for better conditions and more financial support. Occasional
exceptions to this general pattern have been a presidential guard mutiny in
1993 and anti-Ghanaian violence after a soccer match that year. More recently,
early in 1999 a riot over increased bus and taxi fares in a poor section of Abidjan
resulted in looting, including the looting of a large clothing store that is
part of a French-owned chain.
All these events are exceptions to the rule of relative stability. Cote d'Ivoire
has never had a coup d'etat, a military Government or a rebel movement. In
1994, for example, the fifty percent devaluation of the CFA franc failed to
ignite popular unrest, despite the Government's decision to hold average wage
increases to only 10 percent. As the 2000 elections approach, further civil
disturbances are likely but serious violence has not characterized Ivoirian
political life in the past and is not expected to do so in the foreseeable
future. Historically, private investment has not been targeted, with the
notable exception of the above-mentioned bus fare riots.
Corruption and Crime
Though Côte d'Ivoire has the legal framework in place to prosecute corruption,
the pattern has been only to remove officials tainted by corruption scandals
rather than to prosecute them. Corruption has the greatest impact with regard
to the judiciary, contract awards, customs, and tax enforcement. The opposition
press is active in seeking to expose any occurrence of high-level corruption.
The diminished role of Government in the economy, a result of the recent
privatization of many public services, should also help to reduce the incidence
of corruption in Côte d'Ivoire.
Crime in Abidjan has increased over the past several years and is now
at a critical level. Street crime of the "grab and run" variety, as
well as pick pocketing in crowded areas, is widespread. Armed carjacking,
robberies of businesses, and home invasions are on the rise, and are often
targeted at expatriate residents who are seen to be wealthy. Armed criminals
have used force when faced with resistance. Travelers displaying jewelry and
carrying cameras are especially at risk. Travelers have found it useful to carry
limited amounts of cash and only photocopies of key documents. It is
particularly dangerous to visit the Treichville, Adjame, Abobo, and the Plateau
business districts after dark. The De Gaulle and Houphouet-Boigny bridges,
which cross the lagoon in Abidjan, are dangerous areas for pedestrians, even in the
daytime. Many hotels, restaurants, nightclubs and supermarkets provide security
guards to protect clients and their vehicles.
Labor
By regional standards, Côte d'Ivoire has a highly trained and highly capable work force.
The Government has traditionally encouraged the hiring of Ivorian nationals,
and work permits for expatriates from outside of the franc zone have sometimes
been hard to obtain. Expatriate managers nevertheless dominate the upper ranks
of the business community, which may explain Government sensitivity on this
issue. Recently established Ivoirian subsidiaries of foreign companies continue
to obtain permits for expatriate managers.
The Ivorian labor market is segmented. Unskilled and day labor is readily
available, while clerical, technical, managerial, and professional talent is
more difficult to find. Wage rates are relatively high by regional standards,
but costs of capital goods, transport, and energy are also high; it is therefore
not obvious that high labor costs provoke overspending on laborsaving
technology.
Previous labor laws were relatively rigid, and made it hard to terminate
workers for just cause. The adoption of a new labor code in January 1995 has
introduced greater flexibility into the functioning of the labor market, with
fewer restrictions on recruitment and dismissal, for example. With the aim of
promoting employment, the Government has also eliminated or reduced taxes
effecting wage costs.
International Investment Agreements
Côte d'Ivoire has double taxation treaties (based on the OECD model treaty) in
force with France, Belgium, Germany, Great Britain, Norway, Canada, Italy, and
in Africa with Benin, Burkina Faso, Congo, the Central African Republic, Gabon,
Mauritius, Mali, Mauritania, Niger, Rwanda, Senegal and Togo. These treaties
relate to both personal and corporate income taxes.
Foreign Trade Zones
Bonded warehouses exist, and bonded zones within factories are allowed. High
port costs and maritime freight rates have inhibited the development of in-bond
manufacturing or processing, and there are consequently no foreign trade zones.
Bonded warehouses serve mostly for transshipment of goods to Mali and Burkina Faso.
Foreign Investment Statistics
Although foreign investment data for the overall economy is not available, a
series of high-profile projects suggest that Côte d'Ivoire has been enjoying
a boom in foreign direct investment. These projects include France Telecom's
major investment in 1997 (see below), a wave of cocoa-processing investments,
continued oil and gas exploration and development (see below), a second
independent power generation project, a privately run toll bridge, and a port
expansion.
France continues to be the most important foreign investor in Côte d'Ivoire,
providing well over half of the total stock of foreign direct investment.
Important French investors include the major French banks and insurance
companies, Total and Elf (petroleum distribution), Bollore (shipping and rail),
Mimran (flour), BGI (beer and soft drinks) and Saur/Bouygues (public utilities
and construction). It is hard to overstate the role of the Bouygues group: it
dominates the local construction industry, holds both the water and electricity
distribution concessions, owns the first independent power producer, and it is
a shareholder in the largest natural gas field. British investment, largely in
commerce and agriculture, has traditionally been the second largest in Côte d'Ivoire,
following France. Swiss investment was concentrated in banking and
food processing however Asea-Brown Boveri, the Swiss-Swedish engineering giant
has made a major investment in the second independent power producer, which was
inaugurated in January 1999. Except for one oilfield redevelopment project by
Ranger Oil, Canadian investment has largely been in the mining sector but has
yet to move beyond the exploration phase.
Although the Government investment statistics below, based on historical
accounting data, show Lebanese and Syrian investment ranking fourth after Switzerland,
these figures undoubtedly understate the Lebanese role in the economy. The
Lebanese dominate commerce: everything from general stores in up-country towns
to modern supermarkets in Abidjan. Some of the larger, well-established Lebanese
families are virtual conglomerates, owning hotels, a tuna-canning plant, movie
theaters and paper goods factories. Unlike European or American investment,
Lebanese-owned companies are usually privately held by long-time Lebanese
residents of Cote d'Ivoire rather than subsidiaries of foreign-based
corporations.
The biggest U.S. investment is by the Houston-based petroleum
exploration and development company Ocean Energy. The consortium has invested
over US$300 million over the past five years, with about half of this being
American investment. Houston-based Apache Petroleum's development of its
Foxtrot gas field has required US$146 million of investment from Apache and its
partners, mostly in 1998 and 1999.
In January 1999, U.S.-based Cargill announced a US$60 million investment in a
new cocoa processing plant. With the liberalization of cocoa and coffee exports
in 1998-99, Cargill and other commodity trading multinationals have invested
both in local cocoa processing and in exporting raw cocoa beans. Whereas this
market was traditionally dominated by Ivoirian companies, multinationals like
Cargill will take on a larger role with the liberalization.
Potential U.S. investments in the Ivorian telecommunications sector
may also add to the U.S. investment presence in Côte d'Ivoire,
as at least one, and possibly two, U.S. investments in this sector are likely to be
finalized.
Taxation
The corporate, capital gains and branch tax rates are 35 percent. The
withholding tax on dividends and interest are generally 12 percent and 18
percent, respectively, although this rate may fluctuate. Branches of foreign
companies must pay a 12 percent tax on half of its profit. There are several
exempt categories for which a company developing an industrial or agricultural
enterprise in Cote d'Ivoire may qualify. A minimum tax rate of .5 percent does
apply, although a reduced rate is offered for petroleum companies, financial
enterprises and electric and water utilities.
There are no general performance requirements or incentives applied to
investments, though benefits accorded to an investor under one of the
investment regimes may vary depending on the nature of the investment made.
Preferences may be granted to investors seeking to establish themselves outside
of Abidjan. Those investors will benefit from an eight year tax exemption compared
to five years while investing in the Abidjan area. Should a company seek designation as a
priority enterprise eligible for the tax and other benefits provided in the
investment code, Ivorian participation becomes negotiable and the firm may be
required to purchase Ivorian products. Under the old investment code,
designation as a priority enterprise was available to investors in agriculture,
livestock and fishing, storage and treatment of agricultural and food product,
low-cost housing construction, extractive industries, power production, and
manufacturing and assembling. It is unclear how the new code will treat
so-called priority investments.
There is also a statistical tax of 2.6 percent paid on all declarations, a
value added tax (VAT) of 20 percent, special compensatory levies on meat and
poultry imports and specific excise taxes on tobacco products and alcoholic
beverages.
Stock Market
The Bourse Regionale des Valeurs Mobilieres (BRVM) was opened in September 1998
to serve as a regional financial market for the member-states of the West
African Economic and Monetary Union (UMOEA), which includes Benin, Burkina Faso,
Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. At its inception, the BRVM had 35 listed companies.
Listing requirements include: a share capital of CFAF 200-500 million; 15-20
percent public ownership; five annual reports; balance sheet.
The BRVM has computerized trading with satellite links. Trading occurs on
Mondays, Wednesdays, and Fridays. Trading is now decentralized so that
member-countries can trade simultaneously from their national bourse via
satellite links.
For more information on the
Bourse Regionale des Valeurs Mobilieres, see URL: http://www.brvm.org
For
further information on investing in Cote d’Ivoire, please visit: http://www.cepici.go.ci
Sources: International Monetary Fund (Country Watch): http://www.imf.org